It is understandable if off-pitch concerns now dominate at the DW Stadium, where times are so hard that the raised money has been welcomed “even down to putting petrol in the lawnmowers to get the pitches mowed”, joint administrator Paul Stanley of business recovery specialist Begbies Traynor told Wigan Today.

The eponymous DW is Dave Whelan, the Latics chairman who took them from the third division to become English Premier League stalwarts and 2013 FA Cup winners during his two decades at the club. His tenure ended in 2018 when he sold the club to Hong Kong-based International Entertainment Corporation (IEC), which is where this trail of administration begins.

Fronted by Stanley Choi Chiu-fai, a businessman and high-stakes poker player who notably won the HK$50 million first prize at the first Macau High Stakes Challenge in 2012, IEC was founded in 1998 by the late tycoon Cheng Yu-tung of Chow Tai Fook and New World Development.

By 2007, IEC had expanded into “hotel and entertainment operations in the Philippines and Macau”, according to its official website. It sold its stake in Macau casino L’ Arc in 2010 and tried unsuccessfully to buy Macau junket operator Suncity Group in 2014, while maintaining its casino interests in the Philippines. In 2018, IEC also signed a deal with Poker Stars to operate tournaments across Asia.

That year it also expanded into the ownership of football with a deal to buy Wigan from the Whelan family for £15.9 million. IEC told the Hong Kong stock exchange that “the proposed acquisition, if completed, represents a good opportunity to diversify the income stream of the company and broaden its revenue base”.

At the time Wigan, like most English Football League clubs, were operating at a loss, as was IEC. Questions were asked of the EFL but the deal was approved. Now, two years, one takeover and an administration on, more questions are being asked of the EFL.

IEC set out its desire to sell to the Hong Kong stock exchange (HKEX) in February this year, pointing to the club’s underperformance both on and off the pitch. The deal with NLF, then 49 per cent owned by Hong Kong businessman Au Yeung Wai-kay, went through in June after approval from both the EFL and Hong Kong stock exchange, with administration following weeks later.

The headlines since have been dominated by a film of EFL chairman Rick Parry discussing a bet placed in the Philippines that the club would be relegated.

“There’s rumours that there is a bet in the Philippines on them being relegated, because the previous owner has got gambling interests in the Philippines,” the former Liverpool chairman said in a video widely shared on social media.

While the owners links with gambling in the Philippines should have been a red flag to the EFL, the bet has been dismissed as a red herring (despite it fuelling conspiracy theories online). Gambling insiders have confirmed that no one would take a bet any larger than a few thousand dollars on relegation.

However, connections to the Philippines’ gambling sector are a worry based on the United Nations’ “Transnational Organized Crime in Southeast Asia: Evolution, Growth and Impact 2019” report from last April, which said that Southeast Asian casinos were vulnerable.

“At the same time, the region’s rapidly expanding network of casinos, many of which are lightly or not at all regulated, has emerged as a perfect partner or offshoot industry for organised crime groups that need to launder large volumes of illicit money,” the report read.

That was later backed up by the Philippines Anti-Money Laundering Council (AMLC) in January which described their casinos as highly vulnerable.

Even links to Macau, which the United Nations Office on Drugs and Crime (UNODC) confirmed to the Macau News Agency in 2019 was still a “centre for money laundering in the region”, should have been another red flag for the EFL’s due diligence process.

The links to the Philippines are stronger within the latest Wigan takeover. IEC operates a casino and hotel in the Philippines, a business they are looking to expand, while Au Yeung has apparent links to the Philippines, too.

Hong Kong casino giants’ takeover of English club Wigan moves closer

Among the few references to him on the internet, he applied for an alien employment permit in 2015 as an administrative consultant for Superl, a Hong Kong-registered luxury handbag manufacturer. A notice in the Philippine Daily Inquirer published on September 19, 2019, stated that Au Yeung no longer worked for Superl.

On a side note, the Philippines Department Of Labour And Employment notice lists Au Yeung as Chinese, although business information site Endole lists him as a Hong Kong national in his directorship of five companies related to Wigan.

The club is also linked to the Philippines through its main sponsor KB88, which they signed with in July 2019. The club’s executive chairman at the time, Darren Royle, had previously worked with the company, which also partners with Ajax, Bayer Leverkusen and Roma. The online betting company was described as “based in the Philippines” when Roma announced their deal in 2017.

If the previous takeover should have given cause for concern for the EFL then the latest takeover, which led to the club being put into administration within weeks, was even more alarming.

Au Yeung was declared bankrupt in Hong Kong in 2004, according to local records. This was discharged in 2008 before he was released as a trustee in 2012, but there is no mention of whether this was declared to the EFL. The Times reported on July 3 that administrator Gerald Krasner intended to ask about a Hong Kong bankruptcy case that may have involved someone associated with the club.

One Wigan fan had raised many of these concerns with the EFL in May, emailing them to also point to a £28.77 million loan that appeared to be the club’s only source of future income.

Why would anyone want to buy Wigan Athletic?

NLF, a company only founded in January, agreed to the terms of IEC’s loan – 8 per cent interest per annum rising to 20 per cent after 12 months.

IEC described this loan as “attractive and favourable for the company” in its February statement to the HKEX declaring its intention to sell. The document also cited uncertainty over Brexit (which had been voted in June 2016, some two years before it bought the club) and the club – 22nd in the Championship at the time – being “unlikely to be promoted to the Premier League in the next season”.

Moreover, the lender and borrower were the same person: IEC owner Choi was reported as owning 51 per cent of NLF (with Au Yeung named as owning the other 49 per cent).

The move from IEC to NLF was seen by some at the time as merely moving the club from public to private, while the terms of the loan were unusual but in no way illegal, as University of Liverpool finance lecturer Keiran Maguire pointed out.

“The vast majority of loans from owners to clubs are interest free because so many clubs are losing money. If you look at the likes of Chelsea (Roman Abramovich has lent them £1.3 billion), Brighton (Tony Bloom, £280 million) and Newcastle (Mike Ashley, £111 million) all these have no finance costs,” Maguire said.

“There are some examples, however, where owners are charging interest such as West Ham, where the owners have earned over £18 million in interest since acquiring the club, and QPR, where owners were charging interest at 26.8 per cent for a while on a particular loan.”

The terms were indeed favourable to IEC which not only sold at a profit – NLF paid IEC £17.5 million – but have since been paid back its loan in full, as it reported to the Hong Kong stock exchange on May 29.

This good fortune has been reflected in its share price: IEC hit HK$0.80 on June 19, its highest since last August.

That high followed a day after the company announced that it had received a letter of no objection to its new Manila casino from the city government, ahead of applying for a gaming licence. There was a huge increase in share activity in the days before it hit its peak – more than 35 million shares were traded on June 16.

EFL chief says Hong Kong owners of Wigan have disrespected English football

As for Wigan, their fortunes have dwindled. NLF was confirmed as the new owner on June 4 in a club statement. By June 24, Au Yeung was listed as at least 75 per cent owner of NLF and that same day his lawyers instructed the club to go into administration. During the intervening time, IEC chief executive Thomas Chan Chu-yiu, the only IEC member to stay on the board after the change in ownership, left the board and the club passed into administration.

Now the finger pointing has begun. Last week, Au Yeung’s lawyers made a statement, released to newspaper Wigan Today.

“Wigan Athletic is a wonderful football club with rich history and a passionate fan base. We bought Wigan Athletic with the best intentions: to create a team that would get the club back into the Premier League, and I have invested more than £40 million,” he said, referring to the figure to buy the club and pay back the loan to IEC.

“Unfortunately, the Covid-19 crisis has severely impacted people and businesses around the world – and Championship football clubs, which rely on fans coming through the turnstiles, are no exception. This has fundamentally undermined our ability to fund Wigan Athletic and, after struggling to find a solution, in the end took the difficult decision to put the club into administration to ensure its survival.

“The administrators are now doing everything they can to find a new owner who will secure the future of Wigan Athletic for the sake of the many thousands of devoted Latics fans, and the local community.”

It should be noted that Wigan had the lowest match day revenue in the 24-team division – £2 million for the 2018-19 season – and the lowest income, at £12 million for 2018-19. Despite that, the club were regarded as well-run with their losses “midtable by Championship standards,” according to Maguire.

“From a business perspective it seems incredible and illogical that IEC were able to buy WAFC for about £22m (including debt), run it at a loss and sell it 18 months later for £41m (including debt), during the biggest global economic crisis for 80-plus years,” Maguire said.

Furthermore, the Covid-19 pandemic was also well under way when NLF agreed to buy the club from IEC. “The claims from Choi Stanley and Au Yeung that COVID-19 was a driver for putting the club into administration are preposterous,” Maguire said. “Those conditions were known before the sale took place.”

The EFL released its own statement in response to Au Yeung’s comments. “The league fundamentally disagrees with the comments attributed earlier today to Mr Au Yeung Wai-kay where he stated ‘the Covid-19 pandemic has undermined the ability to fund the club’,” it read.

Hong Kong-owned Wigan Athletic enter into administration

“While it is clear Covid-19 has undoubtedly presented significant financial challenges to the professional game, evidence of the required source and sufficiency of funding to be invested in or otherwise made available to the club, was provided as part of the recent change of control process.

“This set of circumstances is more illustrative of the wider financial challenges facing EFL clubs, who, without a full and comprehensive reset of football’s finances, including how monies are distributed throughout the game, will continue to struggle to meet the demands of an outdated and unsustainable model.

“In respect of the challenges at Wigan Athletic, there is clearly a number of important unanswered questions that require urgent attention and the EFL welcomes the move made by the administrators to launch an investigation as to what has led to the club being placed into administration just a matter of weeks after the Next Leader Fund (NLF) took ownership of the club.”

Most interestingly, former owner Choi has also distanced himself from both NLF and Au Yeung in response to their media statement. “There is no relationship,” Choi told the Financial Times in an interview published last Friday, suggesting that the pair only met last year through a mutual friend.

“The main purpose of the sale was to remove the financial burden from owning this club, which would have been loss-making if we had continued and which the shareholders [of IEC] hated.”

The Financial Times also reported that the profitable sale was related to an IEC application to upgrade a hotel to a casino in the Philippines, with advice that the licence would not be approved while Choi maintained a stake in a football club. The first step towards approval has been granted and an IEC subsidiary has since applied for the gaming licence as reported to the HKEX.

Hong Kong-owned Birmingham City under EFL investigation

Wigan fans are now hoping that someone else will take a gamble on the club. Administrators have reported that there have been more than 50 potential buyers contacted and three have provided proof of funds. There are believed to be concerns from potential buyers at the club’s wage bill, although player sales could offset this and administrators are hopeful of a sale.

Elsewhere, the situation, described as a “global scandal” by Wigan MP and shadow foreign secretary Lisa Nandy, has led to calls for the EFL to do more.

Parry admitted to the BBC that the test could be tightened as he said that Au Yueng had passed. “It’s a test that, by definition, the more foreign owners you have the more difficult it is to apply,” he said, “because the amount we can gather from publicly available sources is more challenging, especially in Asia.”

Considering that several EFL clubs are owned by Asian companies and individuals, that is a worrying statement from the chairman. More so, while what happened with Birmingham City is fresh in the memory.

No one has offered a satisfactory explanation as to why NLF would spend such money on taking control of Wigan to immediately put them in administration. “It makes more sense to preserve Championship status and sell the club with that income stream than risk relegation to League One and an 80 per cent drop in broadcasting revenues, as well as a longer route back to the Premier League,” Maguire said.

Administrators Begbies Traynor and the EFL are investigating the takeover – which Choi told the Financial Times that he would “welcome the process and will be transparent as possible” – but it is too little, too late for the Latics.